Cost-Benefit analysis of urban nature-based solutions: A systematic review of approaches and scales with a focus on benefit valuation

Abstract

Urban nature-based solutions (NBS) are increasingly recognized as an effective strategy to address urban sustainability challenges. Cost-Benefit Analysis (CBA) is a widely used method for assessing the economic feasibility of NBS interventions and supporting decision-makers in comparing different investment alternatives. Performing a CBA, however, is complex and requires making methodological choices and assumptions, such as choosing the discount rate and the temporal horizon, which can significantly affect the outcome estimates. Moreover, the inclusion of the full range of costs and benefits can be challenging due to difficulties and uncertainties in estimating their monetary value and accounting for their spatial and temporal dynamics. The objective of this research is to critically analyze current applications of CBA on urban NBS in the scientific literature, identifying trends, limitations, and research gaps. To achieve this, we conducted a systematic review of articles published between 2000 and 2022, resulting in 114 observations of CBAs for urban NBS. The review compared CBA approaches and scales, focusing on the monetary valuation of costs and benefits, as well as the spatial and temporal dynamics of benefits. Our results indicate a predominance of CBAs with a social, as opposed to private, perspective, and with a focus on building solutions and small-scale NBS interventions. Moreover, we found a general lack of consideration for environmental externalities among the costs, and an incomplete inclusion of the full range of benefits, often due to difficulties in estimating their monetary values. We also found that CBA studies usually do not consider the variability in NBS performance over time. Finally, most studies reported a positive CBA outcome, suggesting that NBS are generally economically advantageous.